Ex-Jp Morgan Banker Sounds Alarm On Ai Giant Openai Over Valuation Woes

Benjamin Riley, a former investment banker at JP Morgan, has sounded the alarm about OpenAI, the cutting-edge AI firm valued at $157 billion. His concerns stem from his experience valuing Enron’s business in 2000, when he and his team were tasked with estimating the value of The NewPower Company, a venture backed by Enron. Their analysis revealed a lack of concrete business fundamentals, including “no clients, nor any existing revenue, nor even a discernible cost model.” Despite these red flags, JP Morgan invested tens of millions of dollars in Enron anyway.

Fast-forward to OpenAI, which has also received a massive influx of funding despite showing no clear path to profitability. This trend has raised eyebrows among investors and observers, with some warning signs pointing to a similar pattern. “All the signs are there,” Riley notes, citing OpenAI’s convoluted corporate structure, opaque decision-making processes, and restrictive policies on ex-employees.

OpenAI’s non-profit structure mirrors Enron’s complex corporate setup, but unlike Enron, which later converted to a for-profit model, OpenAI is now expanding its operations through a for-profit arm. This move has sparked concerns about the company’s governance and accountability. Moreover, Riley notes the massive turnover at senior leadership levels over the past year, with some speculating that this could be a sign of deeper issues within the organization.

The recent murder of an OpenAI whistleblower’s mother, who alleged her son was struggling with the company’s pressures, has also raised questions about the company’s culture. While some may dismiss these concerns as mere paranoia, Riley’s experience at JP Morgan serves as a cautionary tale about the dangers of ignoring warning signs in high-stakes investments.

The future of OpenAI’s $157 billion valuation hangs precariously in the balance, and only time will tell if it can avoid the pitfalls that befell Enron. In the tech industry, where speed and innovation often trump caution, Riley’s warnings serve as a timely reminder to prioritize sound business practices over hype and buzz. The parallels between Enron and OpenAI offer a valuable lesson about the importance of due diligence in high-stakes investing.